October 20, 2015

When Martin Shkreli bought Turing Pharmaceuticals and jacked up the price of one AIDS and cancer pill from $13 to $5,000, it seemed to be a short-lived story. Not after he tried to donate to Bernie Sanders’ campaign. Sanders passed the donation along to a Washington DC community health center specializing in HIV/AIDS care and made Shkreli furious. He first said that he wanted to punch a wall and then claimed he had a fractured wrist. The X-ray he tweeted came from a medical website.

Shkreli should be used to criticism: board of directors of Retrophin, his first drug company that was founded in 2011, threw him out and sued him in August for $65 million. He allegedly “used his control over Retrophin to enrich himself” and to pay back investors in his hedge fund, who lost millions in a bad investment with him. While CEO at Retrophin, Shkreli increased prices on a decades-old kidney medication by about 20 times its original cost. Like drug increased by Shkreli at Turing, the medication has no alternative. A former Retrophin employee, Timothy Perotti, had already sued him for harassing Perotti’s family, including Shkreli’s message to Perotti’s wife: “I hope to see you and your four children homeless and will do whatever I can to assure this.”

Turing isn’t unique in its price gouging. Last summer, Rodelis Therapeutics increased the cost of 30 tablets of cycloserine, a tuberculosis drug, from $500 to $10,800. Unlike Turing, the company returned the rights to the medication to the Chao Center for Industrial Pharmacy & Contract Manufacturing after people learned of the profiteering. Earlier, Valeant Pharmaceuticals International Inc jacked up the prices of two heart drugs, Nitropress and Isuprel, by 525% and 212% on the same day that they acquired them. One woman’s out-of-pocket cost went from $510 in 2010 to over $12,000 in 2014. Unable to afford the cost, she is left with severe pain.

CEO J. Michael Pearson of Valeant, one pharmaceutical company investigated, proved what people already know, that capitalism trumps saving lives. He said, “My primary responsibility is to Valeant shareholders. We can do anything we want to do. We will continue to make acquisitions, we will continue to move forward.” The stock price has increased more than 1,000 percent since he took over and increased the price of 56 drugs by an average of 66 percent.

In the past, Sanders participated in an investigation into “anarchy pricing” of drugs as prices of the 10 leading generics were hiked from 400 percent to 8200 percent. Shkreli has benefited the nation by bringing to light how truly egregious the cost of drugs is. The drug price travesty also caught the attention of other presidential candidates beyond Sanders. Hillary Clinton called for an investigation into the pricing, and Donald Trump said that Shkreli should be “ashamed of himself.” Even Marco Rubio is jumping on the bandwagon, but he blames the drug companies’ “profiteering” on government regulations. The attorney general’s office of New York State is initiating an anti-trust investigation into Shreli’s actions.

Clinton has said that the FDA has little control over price gouging, but it can expedite reviews of generic alternatives to Shreli’s drugs. Last month she called for a $250 monthly cap on out-of-pocket prescription drug costs. Prices for drug industry stock took a deep dive, and Shkreli, known as “the most hated man in America,” was ridiculed on Saturday Night Live.

As Sanders has said, high drug prices are killing people in the United States, and the prices keep getting worse. Last year, inflation was 0.8 percent, but drug costs increased 12.6 percent, providing drug companies with a $45 billion profit. People in the United States spent 40 percent more per person in prescriptions in 2013 than Canadians and five times more than people in Denmark. A new drug for Hepatitis C, necessary for many veterans who contracted the disease from tainted blood supplies and vaccination “jet injectors,” costs $1,000 a pill, compared to $10 in other countries. The Veterans Affairs program no longer provides this effective drug. Seven out of 10 people in the U.S. take prescription medication, yet one in five people doesn’t fill prescriptions because of cost. Drugs are predicted to increase ten percent per year for the next ten years for a 100-percent increase.

A constant excuse from drug companies is that the high prices are to develop new drugs that save lives, but there is no proof. Half of the scientifically innovative drugs approved in the U.S. from 1998 to 2007 came from research at universities and biotech firms, not big drug companies. Drug companies also spend 19 times more on marketing than for research and development. According to Robert Reich, exclusive patents contribute to the high costs of the medicines, and the right to exclusively manufacture the drugs last for 20 years, longer than most other countries. Prices of a medication tend to increase as the expiration of the patent nears. Even after the 20 years, companies slightly tweak the medication—perhaps a one-week duration instead of a one-day requirement—that extends the patent for another 20 years.

Another excuse for drug price gouging is the call for a free market. Yet if only one company produces a drug, it represents a monopoly and not the free market. Republicans object to government regulations, yet laws allow drug companies to control pricing and mislead doctors and the public about drug safety and effectiveness. Tens of millions of dollars in campaign contributions and lobbying result in longer and stronger patent protection, preventing agreement with other countries.

One company is suing Canada because the country doesn’t want to pay exorbitant U.S. prices. Alexion Pharmaceuticals owns only one drug, Solaris, that treats people with an extremely rare blood disease that kills untreated people. The annual cost of the drug is about $700,000 for a treatment every two weeks, and Alexion is suing to keep the price up there. The production of the drug, developed primarily through public funds in universities, is $60 per treatment. The markup? About $6,700 a treatment.

People moaning about the high cost of Medicare need to know that the GOP sold out the country in its 2003 law adding Part D, which provides insurance for drugs. Although Medicaid and the Veterans Affairs can legally negotiate with drug-makers for lower prescription drugs, Part D, Medicare insurance for prescription drugs, lacks the same money-saving advantage for taxpayers. Because Part D must come from private insurance, those corporations and drug companies make a fortune. These companies make even greater profits because the law moved people from Medicaid to Part D.

One way to decrease the cost of prescription drugs is through review boards. Drug companies charge people in the U.S. whatever they want because the FDA has no regulatory authority for comparative reviews of medications, but Canada’s review board determines how effective a drug is compared to other drugs for the same purpose. The U.S. Memorial Sloan Kettering cancer center showed that reviews can control prices. When the hospital refused Zaltrap in 2012 because it cost twice as much as Avastin, a good alternative to the colon cancer drug, the manufacturer of Zaltrap, worried about other hospitals and doctors doing the same, halved the drug’s price. Because they could.

Federal law prevents people in the U.S. from legally purchasing drugs from outside the country, but a state representative in Minnesota is proposing a law to establish a program in which local pharmacies could cooperate in allowing state residents to purchase drugs from Canada. Drug companies have already started a fear campaign about danger of drugs from other countries. They also claim that “there is no evidence that importing drugs from Canada or other countries will save patients money.” Yet, a cancer drug costs one person $2,400 in the U.S. but only $660 in Canada.

Over 80% of the active pharmaceutical ingredients in medications sold in the U.S. are manufactured elsewhere, many of them in China and India. No one knows how often the companies are inspected. A recent report indicates that 40 percent of generic drugs are made in Canada.

Why should we pay lower prices for prescription drugs? Because we can!